Beyond Meat's Q3 2025 Earnings Call: Contradictions in Operational Efficiency, International Foodservice Strategy, and Margin Pressures Emerge

Date of Call: November 11, 2025

Financials Results

• Revenue: $70.2M, down 13.3% YOY vs $81.0M prior year
• EPS: ($1.44) per share, compared to ($0.41) in the prior year
• Gross Margin: 10.3%, compared to 17.7% in the prior year

Guidance:

• Q4 2025 net revenues expected to be $60M to $65M.
• Company is providing limited near-term guidance due to soft macro demand and distribution uncertainties.
• Management targets achieving EBITDA-positive operations as soon as possible and expects conversion-cost and margin improvements beginning in early 2026.

Business Commentary:

• Balance Sheet Reset and Debt Reduction:
• Beyond Meat completed a significant debt restructuring, reducing total debt by approximately $900 million, representing nearly 75% of total leverage.
• The transaction also allowed for the potential conversion of another $209 million, potentially reducing total outstanding debt by over 90%.
• This was an effort to stabilize the company's financial health and support operations and growth.

• Revenue Decline and Market Challenges:
• Net revenue was $70.2 million, representing a 13.3% year-over-year decline, within guided range but disappointing.

• The decline was due to ongoing category challenges, a less favorable product mix, and higher trade promotion spending.

• Operational Challenges and Margin Pressure:

• Gross margin fell to 10.3%, down from 17.7% in the prior year, due to lower volumes, higher trade discounts, and non-cash charges related to China operations.
• The company experienced lower volumes, impacting fixed cost absorption, and higher materials costs.

• Strategic Initiatives for Growth:
• Beyond Meat plans to address misinformation regarding its plant-based products and improve distribution in U.S. retail and foodservice.

• The company is implementing actions to reduce operating expenses and expand margins, focusing on product portfolio optimization and supply chain efficiency.

• Financial Outlook and Cash Position:

• Fourth-quarter net revenue is expected to be between $60 million and $65 million, reflecting ongoing demand weakness and distribution losses.
• Cash balance, excluding restricted cash, was $131.1 million at the end of September, with receipts from a capital raise and ATM transactions post-quarter end.
  

  Sentiment Analysis:

  Overall Tone: Neutral

  • Mixed signals: revenue down 13.3% to $70.2M and gross margin 10.3% vs 17.7% last year, with a $77.4M impairment and $110.7M net loss; offset by balance-sheet actions (reduced debt ~ $900M, ~$148.7M ATM proceeds) and management stating they target EBITDA-positive operations and expect margin improvement from conversion/RFP actions in 2026.

Q&A:

• Question from Benjamin Theurer (Barclays Bank PLC): You talked about your path to get back to a gross profit margin of 30%+, which you had in the past at similar sales levels—what's currently holding you back versus 2019, and what needs to change?
  Response: Primary drags are lower volumes (reducing fixed-cost absorption), unfavorable product mix (more lower-margin items), higher material costs and one-time China depreciation charges; management expects continuous production lines, conversion-cost improvements and RFP-driven ingredient savings to drive substantial margin improvement starting in 2026.

• Question from Benjamin Theurer (Barclays Bank PLC): Can you reconcile the cash balance post-October (after ATM and exchange) relative to the ~$120M at end-September—what is the level of cash now?
  Response: CFO: We can't provide a precise post-quarter cash figure now; the ATM generated approximately $148.7M net proceeds but transaction fees from the exchange offer and ongoing cash burn must be accounted for, so you must adjust the quarter-end cash for those items and current operating cash use.

Contradiction Point 1

Operational Efficiency and Margins

It involves changes in the company's strategy and expectations regarding operational efficiency and margin improvement, which are crucial for financial performance and investor confidence.

What is preventing Beyond Meat from achieving a gross profit margin of over 30% at comparable sales to 2019 levels? - Benjamin Theurer(Barclays Bank PLC, Research Division)

2025Q3: The main drag on margin is the lower top line, which reverts throughout the P&L, impacting overhead absorption. There is mix pressure due to lower margin products and higher material costs. Additionally, there are one-time factors like the China depreciation charge. However, there is underlying progress in operations with lower conversion costs year-over-year, and more significant improvements expected in 2026 from continuous production lines and RFP work. - Ethan Brown(CFO)

What specific measures are you taking to achieve positive adjusted EBITDA in the second half of 2026 through top-line growth and operational efficiency improvements? - Benjamin M. Theurer(Barclays)

2025Q2: Top-line growth will come from stabilizing the market share in U.S. retail and introducing new products like Beyond Ground, focusing on high-protein and low-calorie offerings. Operational efficiency improvements include restructuring efforts, brand repositioning to reduce reliance on animal protein replication, and working on gross margin expansion through manufacturing cost reduction. - Ethan Brown(CEO)

Contradiction Point 2

International Foodservice Channels and Partnerships

It involves changes in the company's strategy and expectations regarding international foodservice channels and partnerships, which are crucial for market expansion and revenue growth.

What is preventing Beyond Meat from achieving a gross profit margin of over 30% at 2019 sales levels? - Benjamin Theurer(Barclays Bank PLC, Research Division)

2025Q3: The softening in QSR chains is due to macroeconomic conditions affecting customer demand in certain regions and shifting animal protein prices impacting menu choices. Despite this, Beyond Meat is committed to maintaining partnerships and working together to overcome these challenges. - Ethan Brown(CEO)

What has changed in international foodservice channels, especially in QSR chains, and how can you address it? - Alexia Jane Burland Howard(Sanford C. Bernstein & Co., LLC)

2025Q2: The softening in QSR chains is due to macroeconomic conditions affecting customer demand in certain regions and shifting animal protein prices impacting menu choices. Despite this, Beyond Meat is committed to maintaining partnerships and working together to overcome these challenges. - Ethan Brown(CEO)

Contradiction Point 3

Causes of Margin Pressure

It highlights differing explanations for the margin pressure experienced by the company, which affects investor understanding of underlying operational challenges.

What is currently preventing Beyond Meat from achieving a 30%+ gross profit margin, as seen in 2019 sales levels? - Benjamin Theurer (Barclays Bank PLC, Research Division)

2025Q3: The main drag on margin is the lower top line, which reverts throughout the P&L, impacting overhead absorption. There is mix pressure due to lower margin products and higher material costs. Additionally, there are one-time factors like the China depreciation charge. - Ethan Brown(CEO)

Are you seeing de-stocking trends similar to CPG, and are there additional one-time items to watch for in upcoming quarters? - Kaumil Gajrawala (Jefferies)

2025Q1: As you know, our revenue guidance reflect a softer Q2 than we previously expected. The primary reasons for this are lower-than-anticipated volume in the US and challenges with international supply and logistics. - Lubi Kutua(CFO)

Contradiction Point 4

Strategic Focus and Distribution Challenges

It reflects differing priorities and approaches to addressing strategic challenges, which impact investor understanding of the company's growth strategy.

What initiatives could you implement to reverse the decline in US volume and stabilize US top-line revenue? What are the terms of the $100 million financing agreement, including interest expense, maturities, and expected use? - Benjamin Theurer (Barclays Bank PLC, Research Division)

2025Q3: Focus is on regaining distribution, especially with two major retailers that moved products from fresh to frozen aisles. - Ethan Brown(CEO)

Can you explain the strategy for building the US food service team and how it compares to previous years? - Peter Saleh (BTIG)

2025Q3: Ben, as you know, since 2020, we have not invested in large-scale, major Quick Service Restaurant deals. - Lubi Kutua(CFO)

Contradiction Point 5

Gross Margin Improvement Strategy

It involves the company's strategy for improving gross margins, which is a critical financial metric for investors and stakeholders.

What is preventing Beyond Meat from achieving a gross profit margin above 30% currently? - Benjamin Theurer (Barclays Bank PLC, Research Division)

2025Q1: The food service channel ran into headwinds, particularly in the first quarter given our decision to focus our efforts in food service on smaller national account opportunities that had attractive returns on investment. - Lubi Kutua(CFO)

How achievable is the 2025 gross margin increase to 20% given current challenges? - Ken Goldman (JPMorgan)

2025Q3: The main drag on margin is the lower top line, which reverts throughout the P&L, impacting overhead absorption. There is mix pressure due to lower margin products and higher material costs. Additionally, there are one-time factors like the China depreciation charge. However, there is underlying progress in operations with lower conversion costs year-over-year, and more significant improvements expected in 2026 from continuous production lines and RFP work. - Ethan Brown(CEO)